One Freshman's Approach to Balancing the Budget

About the Author

Let me for a moment share with you some of my background. I am
thirty-two years old going on ninety-nine. I serve on the
Agriculture Committee, which is important for my district--the 10th
District of Michigan--since it is a heavily agricultural district.
Not just farmers, but seed dealers, merchants, hardware store
owners. There is a real infrastructure in a.-rural area. If any of
you here today have lived in such an area, you will understand the
infrastructurell refer to. So I am an advocate and an arden t
supporter of farmers in my district. Hence, I needed to serve on
the House Agriculture Committee. This was a key campaign issue,
just so that you know a little bit more about the approach I take
as a member of Congress. And it was a.key campaign issue be c ause
my predecessor chose to leave the House Agriculture Committee. We
drilled that message home day in and day out, night and day to let
people know that it was high time that we had a Member of Congress
who was a full-time voice and a full-time vote--an advocate--for
agricultural producers in Michigan. So this was a key aspect of my
campaign. It is one reason I came to Congress.

I also serve on the Select Committee an Aging. There is a reason
for this as well. I think my colleagues wanted to see a young man
gray and age before their eyes and, indeed, I think they are
achieving their goal. But this is also good for my district, since
the retired population is very high in some areas. It is important
that the elderly also have a voice and a vote--an advoca te--on
their behalf.

These are the committees I work on. I am one of those "frequent
flyers." I go home every weekend,, even though I never'get to use
my frequent flyer mileage coupons. Nevertheless, I am three days
here, and three days back in God's count ry--as I like to refer to
the area where I was born and raised--where I am a member of the
community. That leaves one day,which I spend in an airplane. But I
have no problem with that. It is an active schedule. But that is
why I was sent to Congress. Not to live in Washington, but to be a
voice for my

Congressman Schuette, a Republican, represents the 10th District
of Michigan. He spoke atThe Heritage Foundation on June 17,
1986.

This is the second in a series of lectures by freshman Members
of Congress.

ISSN 0273-1155. Copyright 1986 by The Heritage Foundation.

constituents; to be aggressive and to try to do everything I can to
help the 500,000-employers who sent me to Congress.

This afternoon I want to share with you some of the ways I view the
probl em of the federal budget deficit,, and how this determines
the way I vote. First, the problem does not exist in a vacuum. Nor
is there a single cure for this problem, for it is an ailment that
infects every part of our body politic. The way we view this p
roblem determines the measures we take to reduce the federal budget
deficit; it influences almost every vote we cast.

There are three general areas that govern my approach to balancing
the budget. First, balancing the budget requires a mixture of
tools--so me institutional tools--that Congress should have to deal
with the budget deficit. Second, it requires a combination df
concepts and philosophies in terms of the budget deficit: the need
for finding reductions, encouraging savings, and developing the
econ o my. Third, ideas. Not just institutional constraints; not
just concepts of why we need to stimulate growth, but ideas,
practical ideas. The Heritage Foundation is a tremendous think tank
and a tremendous avenue for these ideas to reach people through
deba te and discussion. Heritage has taken a leading role in
espousing and exporting, if you will, ideas an how we deal with the
federal government and how to solve the many problems government
often creates.

So that is the framework--the brush strokes--talking about the
tools, some concepts, and the practical ideas needed to balance the
budget. But even if we agree "these tools are fine,, these concepts
are great, these ideas--yes, they are certainly innovative," we
must address the politics-of how we achieve these goals in a
political system where we have two parties which embody different
views and different opinions.

First, the institutional perspective. We need tools to constrain
Congress and to force spending reductions. I approach this from the
standpoint of the Gramm-Rudman-Hollings exercise of fiscal
responsibility through taking measures to achieve budget
targets-over a five-year period. This is a positive first step.
Today the Supreme Court will be deciding the constitutionality of
the present sequest r ation format of Gramm-Rudman-Hollings.
-Although the mechanics may need refinement, the
Gramm-Rudmam-Hollings legislation was a positive first step. Let's
force some c 'ollective discipline. Let's encourage and foster the
political will necessary for elim inating the federal deficit. That
is why I would again vote for the Gramm-Rudman-Hollings proposal
today, just as I did in December.

But the key institutional tool we ought to have is an amendment to
the Constitution to balance the budget. I have not lost my fervor
about that. I have not abandoned the view that government ought to
behave, act, reform, and budget just like people, busin esses, and
families do. Families budget, businesses budget. Well, the federal

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government ought to do the same. I am a co-sponsor of the "Balanced
Budget/Tax Limitation Act." our Founding Fathers believed
government should not spend more than it takes i n. As Jefferson
put it, "To preserve our independence we must not let our rulers
load us with perpetual debt." We need to make this idea part of the
constitutional framework of our government.

Third, I would give our President--or any President of any per
suasion--line item veto power. We give it to some 43 governors. We
ought to give it to the occupant of the Oval Office. The President
must have the ability to eliminate the excess waste and
mismanagement that often results from congressional cowardice, in a
ction, or partisan squabbling. And that goes right to the heart of
the body politic: we do not need programs that merely make the
politicians and their parties look good, we need programs that are
truly meritoriods; that help people; that are shared and s pread
out in a fair fashion across the nation.

We have implemented maybe some 20 percent of the Grace Commission
proposals on private sector initiatives. We need to do more.' Where
we can, we must eliminate abuse, encourage competitive bidding, and
elimina te duplication and overruns. We must adopt the most
efficient practices to streamline the way government operates.

Those are some of the institutional tool's we need to constrain
government spending. They would force Congress to show some
political will. Mind you, I wish we had 535 men and women in
Congress with the backbone and the political courage to look beyond
the next election so that we could make these budget decisions
without such institutional swords hanging over our heads. But we do
not. That i s why I am a firm believer in these tools--these
institutional constraints.

Let's talk about some concepts. I view these as the philosophical
pillars, the bedrock and the foundation of my political outlook,,
which guides the way I conduct business and make decisions. I
happen to think that we should have a tax policy based on the
concept of an expanding economy. Such a concept demands a tax
policy that encourages growth, fosters savings, and stimulates
additional revenues. Similarly, we need a monetary pol icy based on
a concept of growth, a policy that will stimulate growth and added
revenues. Encouraging growth is the other side to the institutional
constraints needed to cure overbudgeting and limit government
expenditures.

It may seen that I am putting un due emphasis on such obvious
concepts as growth coupled with fiscal restraint in government. But
in the past we have seen different concepts--opposite
concepts--coming from the Democrats. They proclaimed a philosophy
of limits and no growth; but it was a policy of limits and no
growth on the American citizen. it was a policy of limits and no
growth on savers, investors, and entrepreneurs; it was not a policy
of limits and no growth on the bloated federal bureaucracy. No,
just the opposite.

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That is what grew while people did not; investors did not;
entrepreneurs did not. And that was the problem. So we need to
invert that. We as Republicans--and yes, I am being a bit political
now--need to have just the opposite philosophy. There are no limits
to what o u r country can achieve, encouraged and fostered by
proper governmental policies and concepts. And we know what those
policies and concepts are: encouraging growth through a balanced
tax system that rewards savings, fosters entrepreneurism. That is
the type of tax policy we should have in America today.

From the standpoint of the monetary policy,, we ought to lower
discount rates further to stimulate growth and revenues. Revenues
are the other side of the ledger of keeping expenditures down. I am
not engagin g in Fed bashing Perle. , but there are other
opportunities. Our Federal Reserve Board has to encourage and
stimulate growth now. I know that Manuel Johnson and others in the
Fed will be meeting soon. I hope that a policy to lower the
discount rate result s, for we need to do more to fuel this
economic engine that we know as America.

The third way we must approach the task of balancing the budget is
through developing ideas, practical ideas. As I mentioned earlier,
The Heritage Foundation, as well as other groups in town-,, has
been instrumental in this regard. one, we need to have enterprise
zones in rural and urban areas to foster growth in depressed job
markets. We saw a version of this last week in the housing bill.
Two years ago, it was called dead. We saw it come back to life and
I think that it is now here to stay.

Additionally, we need to take advantage of all the opportunities to
further deregulate the economy to stimulate business growth and
therefore jobs. Whenever you say growth; whenever you say
investment or help the business world, you are really saying jobs.
That is the rhetoric we need to use and that is the message that
needs-to get through.

Third, privatization. But let's be clear about what such an idea.
entails. We are talking about a concept of private ownership of
property. This must be encouraged. There are opportunities to move,
say, from the area where the government was the landlord, to
letting individuals own their homes. The recent housing bill I
mention e d earlier provided such opportunities, allowing tenant
management and the chance for individuals in public housing to
purchase that piece -of property. That encourages the pride and
responsibility that come with ownership, and it builds a sense of
communi ty so vital to the the neighborhoods. And that is what we
are really talking about: strengthening neighborhoods, families,
and communities.

We can see privatization--a renewed faith in the benefits that come
with the private ownership of property--flow from the power
management administration. We can see it from airports to oil

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fields. We can even see it in new concepts for unemployment
compensation. Instead of the system we have now, we should consider
lump sum distributions for job start-ups or for r etraining. That
is the key: not just providing a monthly dole for the unemployed,
but getting the unemployed back in the workforce. We need to answer
today's problems with new ideas from the standpoint of private
ownership, retraining, and job opportuniti es.

That is my approach in a nutshell. But it is important to remember
there is no one answer. To think so would be naive. Rather, the
answers lie in the interaction of institutional tools and
constraints; some basic conceptsand philosophies to encourage g
rowth; and the practical ideas for putting these concepts to work
at reducing. the scope of government and thus reduce the budget
deficit as.well. But let's go one step further, and its a big step.
All th is may sound nice as we sit in an air-conditioned a
uditorium, but there is a real life outside of Washington, D.C.,
where people have problems. And there are elections: for the House
and for the Senate; for governorships and seats in the state
legislatures. So,there is a politics of fiscal responsibility a s
well. There are politics associated with budget reductions and
savings. I am aware of them as a member of Congress. I try to vote
my philosophy, my conscience, and my district. But you can never be
unaware of the political constraints attached to every vote.

Republicans cannot be stigmatized with the Democratic.rhetoric that
we lack compassion. Nor must we let that charge go unanswered.
"Let's make reductions right now." But this by itself is the'wrong
approach. Or better, it is an incomplete approach. W hat we cannot
do is have'the Democrats put us in the position of having no
compassion because all we want to do is cut. If all we do is focus
on how much to cut, the Democrats will come back and say I've are
not spending enough." And so instea 'd of focus i ng the discussion
on how much do you cut,, the focus ought to be "how do you spend?
The focus should be on prioritization of how we have federal
governmental expenditures. And the question needs to be qualitative
analysis of our federal budget expenditure s, not simply
quantitative.

That to me is the key. When you talk about qualitative analysis;
when you talk about programs of privatization, what you are talking
about is giving people opportunities: to own their property, to
move up the economic ladder,, t o save and pldn for retirement,, to
build a better life for their children. That is what we need to do
as a party. These are the beliefs I hold dear as a member of
Congress. And it is important that the Republican Party make this
the center of the budgeta ry debate. otherwise, we will not be able
to continue the revolution that was started by Ronald Reagan, a
revolution that must continue longer than simply eight years.

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To really make the institutional changes in this country--to change
the representati on in the House, increase our majority in the
Senate, really go back to those state legislators--we need to make
sure that the policies coming out of Washington,, D.C.,, talk about
growth,, talk about progress,, and talk about job development as we
contin ue to.implement new ideas.

The politics of fiscal responsibility are inseparable from our tax
policy. I was at a town meeting a week ago where I talked about
what we are discussing now: the concepts and institutional
constraints that foster economic growth . But someone says, "Well,
Congress has a hard time dealing with that. Why don't you just
raise taxes?" Republicans especially should reject that
immediately. Wherever I go in my district--when I walk down Main
Street--no one says, "You know,, Bill, I'm j u st not paying enough
in taxes today. Why don't you raise my taxes to solve the federal
budget deficit?" Now that may seem humorous, but it is the truth.
To get to Congress, I went virtually farm to farm in many areas. I
travelled across 20 counties in mid - Michigan, from Traverse City
all the way down to Lansing--9,000 square miles. Farmers today do
not tell me,, "Bill, I'm just not paying enough taxes, so if you
raise my taxes'to solve this budget deficit, we will have a bright
future on the horizon." The people I hear express no.such
sentiment. So Republicans need to resist that temptation, because
if you give Congress a tax increase today, you can be sure of
increased spending tomorrow.

In my district, the one area where the ideas and politics of fiscal
r esponsibility often clash is agriculture. My number one job and
my number one responsibility is to be an advocate for farmers. Many
of you no doubt are aware of the problems confronting agricultural
communities. But whether you are or not, I would ask you to strip
through the statistics and go beneath these figures that you read
of a shrinking and declining export. There are portions in my
district that are called "Little Island." Land value once at $3,500
an acre are down to $1,100. If you had-asbets like that, you would
be in .tough personal financial shape. Prices at a plant, unfair
foreign subsidies by competitors overseas--these have real
consequences. Farmers are good managers. They are people who have
been in farming for generations--centennial farme r s. And it is
not just the producer. In rural areas there is a real linkage
between the health and productivity of agriculture and the health
of productivity of the local banker, the merchant, the hardware
store, the diner. There are problems in rural Amer i ca. Beyond
that, when there are problems in rural America, there will be
problems in urban America. A healthy and prosperous rural America
is critical to the health and prosperity of urban America. To a
large extent, America's well-being depends on the he alth and
prosperity of those men and women who are in agriculture today.

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So I am one of those Republicans who are classified as "renegades"
on agricultural matters. And I am that way because first and
foremost I have seen those problems. I know those m en and women
and I have been to their farms. They are in tough shape right now.
Frankly, there have been times when the Administration and I have
been at odds and in great disagreement over the the severity of the
agricultural problems today in America. B u t my job is to be an
advocate. My job is to help farm families in any way I can. So from
the standpoint of agriculture in budget responsibility, it is
important that it be done in a shared fashion--it is a shared
responsibility. There is no one aspect of o ur government that is
solely responsible for the deficit. We are all part of it. So farm
families will tighten their belts a notch as Health and Human
Services does,, and the Department of Transportation,, and the
Pentagon, and every other budget function in this government. That
is my final approach; that is my final concept as it involves rural
America and as it involves agriculture in mid-Michigan, the area
that I am so honored and grateful to represent.